Dive Brief:
- ClearGen, the Blackstone Group sustainability fund, will commit up to $500 million in partnership with GreenStruxure, a joint venture of Schneider Electric and Huck Capital, to develop renewable energy microgrid solutions for commercial and industrial customers.
- GreenStruxure launched in September 2020 and offers no-money-down, modular microgrids installed on-site as part of an energy-as-a-service model. The microgrids serve a variety of users, including small- and medium-sized industrial facilities, schools, hotels and other commercial facilities.
- Through the partnership announced on Tuesday, ClearGen will provide capital and financial expertise, including navigating tax incentives and other market incentives. "This allows us to operate seamlessly for the client as an integrated unit, with transparency and some trusted brand names," said Clark Wiedetz, chief sales officer for GreenStruxure.
Dive Insight:
GreenStruxure seeks to expand the customer base for microgrids by offsetting rising energy costs and instability in the power market, as well as leveraging the increase in sustainability of onsite operations.
The high up-front cost of most microgrid systems deters customers; GreenStruxure offers their product with no up-front capital cost and customers pay them off through long-term power-purchase agreements. GreenStruxure has used this business model since its inception last fall, and more companies are beginning to offer this arrangement. By managing the installation, grid integration and financing, Wiedetz said the product can reach an "incredibly diverse" market of customers that may lack that in-house knowledge.
The solution, Wiedetz added, is like a "second utility or an alternative utility for the client," offering a certain percentage of the building's energy needs through an integrated, sustainable source. Recent extreme weather in California and Texas have also highlighted the need for increased resiliency from grid disasters.
George Plattenburg, co-founder and chief commercial officer of ClearGen, said the energy-as-a-service approach offers the kind of turnkey solution to emissions reduction that ClearGen tries to support. The "significant" $500 million investment, he said, can help broaden GreenStruxure's market, while also navigating how the rapidly evolving electricity market can increase returns for distributed energy resources.
"We think this is well-timed for the market. There is a very large opportunity set of commercial and industrial buildings ready to take advantage of this kind of solution," Plattenburg said. "There's a big impact result to this technology if you can get it into use."
Wiedetz said the two partners are already working on a number of deals that will be announced in the coming months.
Under the energy-as-a-service model, innovative financing arrangements have expanded the microgrid market and made on-site generation and storage a possibility for more businesses. A 2020 Wood Mackenzie report found that 564 microgrids were installed in the U.S. in 2019, more than any previous year. Most of those, the report found, were below 5 MW because of the diversifying market and more modular offerings.
As the market has expanded and the cost of solar has dropped, capital partners have increasingly sought to back microgrid installers. In 2020, private equity firm Warburg Pincus made a $300 million commitment to Scale Microgrid Solutions. Natural gas microgrid operator Enchanted Rock partnered with Basalt Infrastructure Partners in 2016 to form Texas Microgrid LLC.
